Could This AI Chipmaker Be the Market's Next Trillion-Dollar Contender?

Core Insights - AMD's data center CPUs and GPUs are expected to see significant growth over the next decade, potentially positioning the company as a future $1 trillion chipmaker [1][11] Market Position - AMD is the second-largest producer of x86 CPUs and discrete GPUs, controlling 38.6% of the x86 CPU market while holding only 6% of the discrete GPU market [3][4] - The company has seen its CPU market share increase over the past decade due to Intel's production issues, but it has struggled to gain traction in the discrete GPU market against Nvidia [4] Financial Performance - AMD's revenue is increasingly driven by its data center business, which accounted for 47% of total revenue in the latest quarter, while client and gaming segments contributed 43% [6] - Year-over-year revenue growth for AMD's segments shows data center growth at 122%, client and gaming at (21%), and embedded at (25%) [7] Future Growth Potential - Analysts project AMD's revenue and adjusted earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 34% and 45% respectively from 2024 to 2027 [9] - If AMD meets these expectations and continues to grow its EPS at a CAGR of 20% over the following nine years, its stock price could rise to approximately $1,548 per share by 2035, leading to a market cap of nearly $2.5 trillion [10] Competitive Landscape - AMD's Instinct GPUs are priced lower than Nvidia's comparable products, attracting significant orders from major AI software companies [8] - While AMD is unlikely to surpass Nvidia as the leading data center GPU maker in the next decade, it is expected to establish a strong niche with its cost-effective AI-oriented products [11]